4.  On 25 December 1997 the applicant became a member of the executive board of Yurtbank, and subsequently on 25 March 1998 he was appointed as Director General of the bank.
5.  On 19 August 1998 Yurtbank founded the Yurt Security Offshore Bank in the “Turkish Republic of Northern Cyprus” (the “TRNC”). Subsequently, Yurtbank branch offices in Turkey started collecting deposits to be transferred to offshore accounts in the “TRNC”.
6.  On 4 October 1999 the applicant resigned from his post as Director General and subsequently on 30 November 1999 he resigned from membership of the executive board.
7.  On 21 December 1999 the Committee of Ministers decided to transfer the management and control of Yurtbank to the Savings Deposits Insurance Fund (Tasarruf Mevduat Sigorta Fonu). As result, a new executive board was set up and an inspector was appointed to study the administration of Yurtbank.
8.  On 6 October 2000 the inspector submitted his report. Following an inspection of all the bank’s accounts, the inspector found it established that the Yurt Security Offshore Bank owed 32,898,662,376,959 Turkish liras (TRL), 5,105,982 US dollars (USD) and 7,514,387 German marks (DEM) to account holders. The report stated that these sums had been used by Yurtbank to provide loans to companies owned by Mr A.B., the main shareholder of the bank. The applicant’s name was also included in the list of persons who had authorisation to make the transfers. It was however stressed that the inspection had not revealed any direct or indirect responsibility on the part of the applicant in the impugned transfers.
9.  On 2 November 2000 the new executive board filed a criminal complaint against the former board members, including the applicant. It was alleged that fifteen people, including the applicant, had established a criminal organisation to commit fraud. The complainants stated that the former board members had set up an offshore company with the aim of collecting deposits which they subsequently used to provide irregular loans. In that connection, it was indicated that the deposits collected for the offshore account had never been transferred to the “TRNC”.
10.  On 14 November 2000 the applicant was arrested in Istanbul on suspicion of aggravated fraud. According to a form explaining arrested persons’ rights which the applicant signed, he had been informed of the charges against him and of his right to remain silent. In the form it was further noted that legal assistance could not be provided to persons accused of offences falling within the jurisdiction of the State Security Courts.
11.  On 17 November 2000 the applicant was questioned without a lawyer present. In his police statement, the applicant explained that although he had been the Director General of the bank, he had not been directly involved in offshore banking activities, which were administered by a separate directorate. He stated that Yurtbank had acted as a correspondent bank for Yurt Security Offshore Bank. He explained that he had not put pressure on the managers of branch offices to collect deposits for offshore accounts but had known that the managers received bonus payments depending on the number of deposits they had collected for offshore accounts. He further explained that, using the deposits saved in offshore accounts, the bank had signed loan contracts with companies which were owned by the main shareholder of the bank, Mr A.B. In concluding these loan agreements, the bank had not requested any security and the agreements had been concluded on the basis of verbal authorisation, without any documents being submitted. The applicant stated that when he had become aware of the illegal activities he had quit his post as Director General of Yurtbank.
12.  On 21 November 2000 the applicant was brought before the public prosecutor and subsequently the investigating judge at the Istanbul State Security Court. Before the public prosecutor, and without a lawyer present, the applicant repeated his police statement. When the applicant was brought before the investigating judge, the judge allowed the applicant’s lawyer to enter the hearing room. However, he was not allowed to take the floor or advise the applicant. During questioning, the applicant repeated his police statement and pointed out that there was no legislation or court decision that banned offshore banking activities. Following questioning, the applicant was placed in pre-trial detention.
13.  On 10 January 2001 the public prosecutor at the Istanbul State Security Court filed an indictment with that court against thirty accused persons, including the applicant. The prosecutor accused the applicant of forming a criminal organisation and of committing aggravated fraud under Articles 313 and 504 of the Criminal Code (Law no. 765 – now repealed). In this connection it was alleged that a company owned by Mr A.B. had constructed real estate and that before the construction was finished the persons intending to buy the properties had been provided with real estate loans by Yurtbank, in which Mr A.B. was the main shareholder. In the process of concluding these loan agreements, the requisite legal documents and security had not been requested from the potential buyers, and by granting irregular loans the accused persons had allegedly committed fraud. It was also alleged that offshore banking activities had been used as a cover in order to provide illegal and irregular loans to the companies owned by the bank’s main shareholder, Mr A.B.
14.  On 19 March 2001 the Istanbul State Security Court held its first hearing. In the presence of his lawyer, the applicant submitted his written defence submissions to the court. He stated that he accepted the statements taken from him in custody and pleaded not guilty.
15.  On 18 June 2001 the applicant was released pending trial.
16.  Following a change in the domestic legislation, the case was transferred from the Istanbul State Security Court to the Istanbul Second Assize Court on 24 December 2001.
17.  At a hearing held on 10 October 2002 the trial court appointed three experts. In particular, the experts were asked to clarify whether irregular loans had been provided to companies owned by the main shareholder of the bank; whether the accused board members could be held responsible for those allegedly illegal transactions; and whether in providing the loans the bank had complied with the domestic legislation and obtained the prior authorisations and documents that were legally required. The experts were further asked to investigate the legality of the offshore activities of Yurt Security Offshore Bank. On 14 July 2003 the experts submitted a lengthy report to the court. At the outset, they pointed out that there was no domestic legislation which banned offshore banking activities in Turkey and that the establishment of Yurt Security Offshore Bank had been in line with domestic law and the “TRNC” legislation.
18.  At a hearing held on 4 December 2003, the court ordered another expert report. On 13 January 2004 the report was submitted to the court. The experts concluded that, in the circumstances of the present case, it could not be concluded that the accused persons had committed aggravated fraud. In that connection they referred to the fact that when depositors opened offshore accounts it was clearly indicated in the relevant documents that these were offshore accounts, and therefore the depositors should have been aware of the fact that their deposits were not protected by the Savings Deposits Insurance Fund.
19.  On 15 January 2004, pursuant to a change in the banking legislation, the Istanbul Eighth Assize Court became the competent specialised court to deal with cases concerning the Banking Activities Act (Law no. 4389), and the applicant’s case was accordingly transferred to that court. The new court requested a third expert report in order to calculate the damage sustained by the third-party interveners. In a report dated 14 October 2004, the experts pointed out that from 21 December 1999 onwards the accused persons, including the applicant, had been responsible for a total sum of TRL 15,832,536,971,373.
20.  In the course of the hearings, several witness statements were taken, including from the managers of branch offices, who testified that they had been pressurised into collecting deposits for the offshore accounts. The applicant and his co-accused also submitted several legal opinions to the court drafted by university professors, attesting to the legality of offshore banking activities.
21.  On 17 December 2004 the Istanbul Eighth Assize Court delivered its judgment. It held in the first place that it could not be established that the accused persons had intended to form a criminal organisation. It accordingly acquitted them of this charge. As to the accusations that the applicant had been involved in aggravated fraud on two counts, namely by providing illegal real estate loans and by using offshore banking activities to cover up fraudulent loans, the court found the applicant guilty as charged under Article 504 § 3 of the Criminal Code (Law no. 765). The applicant was accordingly sentenced to a total of five years and ten months’ imprisonment and a fine. In delivering its judgment, the court based its findings on the bank’s inspection reports, the expert reports, the police statements of the applicant and his co-accused, and witness statements. The court found it established that in his capacity as Director General of Yurtbank the applicant had given authorisation for the granting of irregular loans to companies which were owned by Mr A.B.
22.  On 7 February 2005 the applicant appealed.
23.  On 22 April 2005 the Principal Public Prosecutor at the Court of Cassation submitted his written opinion on the merits of the case. This opinion was served on the applicant’s lawyer on 7 June 2005. After holding a hearing, the Court of Cassation quashed the judgment of the first-instance court in so far as it concerned the term of imprisonment, stating that the sentence should be reassessed in the light of the new Criminal Code (Law no. 5237) that had entered into force in June 2005. It also upheld the acquittal of the applicant on the charge of forming a criminal organisation.
24.  The case was accordingly remitted to the Istanbul Eighth Assize Court. On 29 September 2005 the applicant requested the court to hear evidence from several witnesses, including directors of the bank and certain experts, in particular a certain İ.F. The court rejected his requests on the same day, stating that the proceedings were at a stage where no more evidence was necessary. Nevertheless, at a hearing held on 27 October 2005 the witness İ.F. was heard and he made submissions regarding offshore banking. In his testimony, İ.F. explained the development of offshore banking and maintained that, in his opinion as an expert, the acts in question had not constituted an offence at the time when they were committed by the applicant.
25.  On 29 November 2005 the first-instance court delivered its judgment. In lengthy reasoning, taking into account the decision of the Court of Cassation, it decided to sentence the applicant to one year and fifteen days’ imprisonment and a fine for providing illegal real estate loans, and then suspended this sentence. As to the charge of aggravated fraud through offshore banking activities, the court sentenced him to two years and one month’s imprisonment and a fine under Article 158 § (f) of the new Criminal Code, indicating that this was the most favourable provision applicable to the applicant’s case. In this connection, it was noted that the main shareholder of the bank, Mr A.B., had committed fraud by way of banking activities. The court further stated that although the applicant had not been officially working for the offshore bank, in his capacity as the Director General of Yurtbank he was aware of the fraudulent actions, and had actively participated in the unlawful activities by using Yurtbank’s resources.
26.  The applicant appealed against the judgment of the Assize Court. On 9 February 2006 the opinion of the Principal Public Prosecutor attached to the Court of Cassation was notified to the applicant’s lawyer and on 13 April 2006 the applicant submitted his written observations in reply.
27.  On 19 October 2006 the Court of Cassation discontinued the proceedings concerning the suspended sentence in respect of illegal real estate loans, holding that the statutory time-limit had expired. The appeal court further upheld the judgment of the first-instance court in respect of the applicant’s conviction for aggravated fraud by way of banking activities.